Donovan v. Idant Laboratories

DONNA DONOVAN, ON BEHALF OF HERSELF AND AS P/N/G/ OF HER MINOR DAUGHTER BRITTANY DONOVANv.IDANT LABORATORIES, AS A DIVISION OF DAXOR CORPORATION

The opinion of the court was delivered by: O'neill, J.

MEMORANDUM

On July 16, 2008, plaintiff Donna Donovan on behalf of herself and as p/n/g of her minor daughter Brittany Donovan filed a complaint in the Court of Common Pleas, Philadelphia County. They allege that defendant Idant Laboratories, a division of Daxor Corporation, is liable for negligence, breach of contract, third-party beneficiary breach of contract, breach of the express warranty of merchantability, breach of implied warranty of merchantability, third-party beneficiary breach of express and implied warranties of merchantability, negligent misrepresentation, strict products liability and negligent infliction of emotional distress for selling defective sperm to Donna Donovan. On August 21, 2008, defendant removed this action to this Court. Presently before me are defendant's motion to dismiss, plaintiffs' response, defendant's reply and plaintiffs' sur-reply thereto.

BACKGROUND

In early 1994, plaintiff Donna Donovan, a Pennsylvania domiciliary, conducted research in order to locate a sperm bank for the purpose of artificial insemination. Plaintiffs allege that plaintiff Donna Donovan entered into a contract with defendant Idant Laboratories, a subsidiary of Daxor Corporation, a New York corporation with its principal place of business in New York, and signed a consent form which contained various representations regarding the quality of the product including that: (1) semen stored at Idant is exceptionally safe; (2) Idant has a screening program that far exceeds mandated standards and (3) Idant's donors go through a rigorous screening process to ensure that they have a good genetic background and history. Plaintiffs allege that, based on these representations, Donna Donovan signed the consent form and selected Idant to provide her with semen for artificial insemination. Donna Donovan was then sent information regarding potential donors and selected donor G738. Plaintiffs allege that she was informed that donor G738 had been fully tested in accordance with New York Health Regulations and that information did not indicate that he had any genetic defects or a history of mental retardation. Plaintiffs further allege that Idant submitted additional correspondence in which it represented that Donor G738 had been a donor for over two years, his sperm had been quarantined and stored for over six months before use and was retested and safe.

After Donna Donovan paid a fee, defendant shipped Donor G738's semen to her physician in April of 1995. Plaintiffs allege that she was successfully inseminated with Donor G738's semen and that she gave birth to plaintiff Brittany Donovan on January 4, 1996. Plaintiffs allege that Donna Donovan noticed abnormalities and developmental delays in the months following Brittany's birth and her pediatrician, Dr. John Curley, informed her that Brittany's development was abnormal. Brittany was taken to the Philadelphia Health Management Corporation for evaluation under the Child Link Program. Child Link referred plaintiffs to Ken-Crest Services which noted developmental difficulties. Plaintiffs allege that in November of 1997 Brittany was referred to the Center for Autistic Children which noted similar developmental delays, and Children's Hospital of Philadelphia diagnosed her as a Fragile X carrier on December 19, 1997. On or about January 28, 1998, plaintiffs were genetically tested at SmithKline Beecham Clinical Laboratories in Norristown, Pennsylvania to determine whether Donna Donovan was a Fragile X carrier. On February 16, 1998, plaintiffs' allege that SmithKline reported that Donna Donovan was not a Fragile X carrier. On May 6, 1998, it determined that Donor G738 was a carrier.

Despite SmithKline's report, plaintiffs allege that Donna Donovan relied on two reports forwarded to her by Idant, one by Dr. Fred Gilbert on July 15, 1998 and one by Dr. Paul G. McDonough on September 12, 1998 which stated that Brittany's developmental problems were not related to Fragile X nor could they be the result of the sperm that was purchased through Idant Labs. Plaintiffs allege that in late August 2006 Dr. Randy Hagerman, a professor at the University of California at Davis M.I.N.D. Institute, informed Donna Donovan that there was a connection between the purchase of sperm from Idant and Brittany's developmental problems. Plaintiffs further allege that it was not until 2008 when a report was published in The American Journal of Medical Genetics Part A entitled "A Girl with Fragile X Permutation From Sperm Donation" that Donna Donovan knew definitively that Brittany's Fragile X developmental and other problems were caused by the sperm sold by Idant.

Fragile X Syndrome, also known as Martin-Bell Syndrome, is a genetic syndrome which results in a spectrum of physical, intellectual, emotional and behavioral characteristics which range from severe to mild in manifestation. Though it was first described in 1943, it was not until 1991 that scientists discovered the gene (called FMR1 for "Fragile X Mental Retardation -1") that causes Fragile X. A DNA test for Fragile X was developed in 1992. According to the CDC, the prevalence of the full mutation in caucasian populations is approximately 1 in 4,000 to 1 in 6,000 males. Female children of female carriers have a 50% chance of inheriting the disease and female children of male carriers have a 100% chance of inheriting the disease. As the disease is carried on the X chromosome and men have only one X chromosome, male carriers are likely to exhibit symptoms of Fragile X at a much more severe level than females, though some females exhibit severe symptoms. According to the Fragile X Research Foundation, though symptoms vary even among those affected in the same family, the signs and symptoms frequently include some variation of mental impairment, ranging from learning disabilities to mental retardation, attention deficit and hyperactivity anxiety, unstable moods, autistic behaviors, seizures and physical features including a long face, large ears, flat feet and hyper-extensible joints.

Plaintiffs allege that Donor G738 exhibited symptoms of Fragile X which defendant failed to recognize. Additionally, plaintiffs allege that Brittany, as a result of being born with Fragile X, has permanently impaired developmental communication and play, motor planning, sensory and cognitive skills and that she is at a high risk for premature ovarian failure and early menopause. She has already been diagnosed with ovarian cysts and is having problems with her menstrual cycles. They allege that she has difficulties with shyness, social anxiety, and is at risk for eye problems, seizures and mitral valve prolapse. Moreover, they allege that any children she has will be at a high risk for the same problems (a child of a female carrier has a 50% chance of inheriting the disease) so plaintiffs allege that Brittany will have to arrange for donor eggs to avoid this complication in any offspring.

STANDARD OF REVIEW

Federal Rule of Civil Procedure 12(b)(6) permits a court to dismiss all or part of an action for "failure to state a claim upon which relief can be granted." Fed. R. Civ. P. 12(b)(6). In ruling on a 12(b)(6) motion, I must accept as true all well-pleaded allegations of fact, and any reasonable inferences that may be drawn therefrom, in plaintiff's complaint and must determine whether "under any reasonable reading of the pleadings, the plaintiff[] may be entitled to relief." Nami v. Fauver, 82 F.3d 63, 65 (3d Cir. 1996) (citations omitted). Typically, "a complaint attacked by a Rule 12(b)(6) motion to dismiss does not need detailed factual allegations," though plaintiffs' obligation to state the grounds of entitlement to relief "requires more than labels and conclusions, and a formulaic recitation of the elements of a cause of action will not do." Bell Atl. Corp. v. Twombly, 127 S.Ct. 1955, 1964-65 (2007). "Factual allegations must be enough to raise a right to relief above the speculative level on the assumption that all of the allegations in the complaint are true (even if doubtful in fact)." Id. (citations omitted). A well-pleaded complaint may proceed even if it appears "that recovery is very remote and unlikely." Scheuer v. Rhodes, 416 U.S. 232, 236 (1974). When considering a Rule 12(b)(6) motion, I do not "inquire whether the plaintiff[] will ultimately prevail, only whether [he is] entitled to offer evidence to support [his] claims." Nami, 82 F.3d at 65, citing Scheuer, 416 U.S. at 236.

DISCUSSION

Plaintiffs have asserted claims for (1) negligence, (2) breach of contract, (3) third-party beneficiary breach of contract, (4) breach of the express warranty of merchantability, (5) breach of implied warranty of merchantability, (6) third-party beneficiary breach of express and implied warranties of merchantability, (7) negligent misrepresentation, (8) strict products liability and (9) negligent infliction of emotional distress based on defendant's failure to test donor G738's semen for Fragile X before sending it to plaintiff Donna Donovan in 1995 when testing became possible in 1992. Defendant has moved for dismissal on the grounds that these claims are time-barred by the Pennsylvania statutes of limitations for torts and contracts and for failure to state a claim.

I. Statutes of Limitations

A. Choice of Law

Before I address the issues in this case, I must decide which state's law applies to plaintiffs' claims. Where, as here, federal jurisdiction is based on diversity of citizenship, I must apply the choice of law rules of the forum state, here Pennsylvania. St. Paul Fire & Marine Ins. Co. v. Lewis, 935 F.2d 1428, 1431 n.3 (3d Cir. 1991) citing Klaxon Co. v. Stentor Elec. Mfg. Co., 313 U.S. 487, 496 (1941). Though plaintiffs argue that New York law applies and defendant argues that Pennsylvania law applies to the substantive law, both agree that the Pennsylvania statutes of limitations applies. Pennsylvania's borrowing statute provides that "[t]he period of limitation applicable to a claim accruing outside this Commonwealth shall be either that provided or prescribed by the law of the place where the claim accrued or by the law of this Commonwealth, whichever first bars the claim." 42 Pa. C.S.A. § 5521(b); see Agere Systems, Inc. v. Advanced Environmental Technology Corp., 552 F. Supp.2d 515 (E.D. Pa. 2008), "noting that Pennsylvania considers statutes of limitations to be procedural and therefore applies its own statutes of limitations unless the so-called 'borrowing statute' applies." New York law also applies the shorter statute of limitations under its borrowing statute for causes of action that accrue in other states. N.Y. McKinney's C.P.L.R. 202; see Spitzer v. Shanley Corp., 151 F.R.D. 264 (S.D. N.Y. 1993).

Plaintiffs bring claims both in contract and in tort. "An action upon a contract, obligation or liability founded in writing" are governed by a four year statute of limitations under Pennsylvania law. 42 Pa. C.S.A. §§ 5525(3), 5525(4), 5525(8). The New York statute of limitations for contracts is six years from accrual. McKinney's C.P.L.R. § 213. Under Pennsylvania law, a two-year statute of limitations applies to "any . . . action or proceeding to recover damages to injury to person or property which is founded on negligent . . . or otherwise tortious conduct." 42 Pa. C.S.A. § 5524(7). Thus, because Pennsylvania's statutes of limitations first bar the claim, they apply to both tort and contract claims.

Additionally, in Pennsylvania, the statute of limitations for claims brought by minors does not run until two years after reaching the age of majority which is 18. Pennsylvania Minors' Tolling Statute, 42 Pa. C.S.A. § 5533(b)(1)(i-ii). The New York infancy statute provides that for causes of action with a statute of limitations of three years or more, minors have three years from when they attain the age of majority, 18, to file a claim and that causes of action with a statute of limitations of fewer than three years have that length of time after they turn 18 to file a claim.

N.Y. McKinney's C.P.L.R. 2028. Again, the Pennsylvania statue of limitations is shorter than that of New York. Thus, even if New York substantive law applies, if the Pennsylvania period of limitations first bars the claim, the ...

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